Gerry pays $W to buy a ten-year annuity with end-of-year payments of $1,400. This purchase price...

Gerry pays $W to buy a ten-year annuity with end-of-year payments of $1,400. This purchase price allows her to replace her capital by means of a savings account that has an annual effective interest rate of 3% and also to earn an overall annual yield of 6% for the ten years of the annuity. Find W.? The answer is 9508.9. Please show steps to the answer without use of excel.

Expert Solution

Opening Balance (A)	Interest at 7.73% (B)	Total Closing (A)+(B)=©	Annuity (D)	Balance at year End ©-(D)
9,508.90	735.04	10,243.94	1,400.00	8,843.94
8,843.94	683.64	9,527.57	1,400.00	8,127.57
8,127.57	628.26	8,755.84	1,400.00	7,355.84
7,355.84	568.61	7,924.44	1,400.00	6,524.44
6,524.44	504.34	7,028.78	1,400.00	5,628.78
5,628.78	435.10	6,063.89	1,400.00	4,663.89
4,663.89	360.52	5,024.40	1,400.00	3,624.40
3,624.40	280.17	3,904.57	1,400.00	2,504.57
2,504.57	193.60	2,698.17	1,400.00	1,298.17
1,298.17	100.35	1,398.52	1,400.00	(1.48)

jeff jeffy answered 1 year ago

A 13-year annuity pays $1,400 per month, and payments are made at the end of each...

A 13-year annuity pays $1,400 per month, and payments are made at the end of each month. The interest rate is 12 percent compounded monthly for the first Five years and 11 percent compounded monthly thereafter. Required: What is the present value of the annuity? A) $1,343,944.86 B) $109,755.50 C) $111,995.40 D) $152,061.20 E) $114,235.31

A 12-year annuity pays $1,400 per month, and payments are made at the end of each...

A 12-year annuity pays $1,400 per month, and payments are made at the end of each month. The interest rate is 11 percent compounded monthly for the first six years and 10 percent compounded monthly thereafter. What is the present value of the annuity?

A ten-year annuity immediate pays 2000 at the end of the first year, and payments increase...

A ten-year annuity immediate pays 2000 at the end of the first year, and payments increase by 100 each year. If the annuity yields 6% annual effective interest, determine the Macaulay duration.

You purchase a 10 year annuity with payments at the end of each year for $10,000

You purchase a 10 year annuity with payments at the end of each year for $10,000 (where for this annuity effective annual interest is 4%). Immediately after you receive payments, you deposit the payment into an account earning 5% effective annual interest. How much is in this account at the end of 10 years? Use this to find the equivalent effective annual interest rate for this $10, 000 investment over this 10 year period.

You purchase a 10 year annuity with payments at the end of each year for $10,000...

You purchase a 10 year annuity with payments at the end of each year for $10,000 (where for this annuity effective annual interest is 4%). Immediately after you receive payments, you deposit the payment into an account earning 5% effective annual interest. How much is in this account at the end of 10 years? Use this to find the equivalent effective annual interest rate for this $10, 000 investment over this 10 year period. please answer all parts of the...

You purchase a 10 year annuity with payments at the end of each year for $10,...

You purchase a 10 year annuity with payments at the end of each year for $10, 000 (where for this annuity effective annual interest is 4%). Immediately after you receive payments, you deposit the payment into an account earning 5% effective annual interest. How much is in this account at the end of 10 years? Use this to find the equivalent effective annual interest rate for this $10, 000 investment over this 10 year period.

A 15-year annuity pays $1,000 per month, and payments are madeat the end of each...

A 15-year annuity pays $1,000 per month, and payments are made at the end of each month. The interest rate is 15 percent compounded monthly for the first six years and 14 percent compounded monthly thereafter. What is the present value of the annuity?Multiple Choice$108,515.59$72,323.18$867,878.16$70,876.72$73,769.64

A 20-year annuity pays $1,450 per month, and payments are madeat the end of each...

A 20-year annuity pays $1,450 per month, and payments are made at the end of each month. If the interest rate is 11 percent compounded monthly for the first ten years, and 7 percent compounded monthly thereafter, what is the present value of the annuity? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A 15-year annuity pays $1,500 per month, and payments are made at the end of each...

A 15-year annuity pays $1,500 per month, and payments are made at the end of each month. If the interest rate is 10 percent compounded monthly for the first seven years, and 6 percent compounded monthly thereafter, what is the present value of the annuity?

17. A 19-year annuity pays $1,300 per month, and payments are made at the end of...

17. A 19-year annuity pays $1,300 per month, and payments are made at the end of each month. The interest rate is 7 percent compounded monthly for the first Six years and 5 percent compounded monthly thereafter. Required: What is the present value of the annuity? Multiple Choice $177,689.68 $225,152.39 $170,721.46 $2,090,466.81 $174,205.57 18. Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your...

Question